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Full Text of Decision

36371

42178 SERVICE
DATE – MARCH 9, 2012

EB

SURFACE TRANSPORTATION BOARD

DECISION

Docket No. FD 35583

EASTERN ALABAMA RAILWAY LLC—PETITION FOR DECLARATORY
ORDER

Digest:[1]
This decision declares that the proposed condemnation of certain railroad
property owned by Eastern Alabama Railway LLC by the Utilities Board of the
City of Sylacauga, Ala., for underground water and sewer lines is not federally
preempted.

Decided: March 8, 2012

On
January 27, 2012, the Board instituted a proceeding to resolve a
controversy between Eastern Alabama Railway LLC (EARY), a Class III rail
carrier, and the Utilities Board of the City of Sylacauga, Ala. (Utilities
Board) regarding the proposed condemnation of certain EARY property by the
Utilities Board for underground water and sewer lines. EARY requests that we
declare that 49 U.S.C. § 10501(b) preempts the Utilities Board’s
proposed condemnation. We find that the proposed condemnation is not federally
preempted.

BACKGROUND

On
August 23, 2011, the Utilities Board filed a complaint for condemnation in
the Probate Court of Talladega County, Ala., seeking to condemn an easement
across EARY’s property for subterranean water and sewer lines.[2]
The underground pipelines that are the subject of the condemnation action would
be located beneath an existing public street crossing of EARY’s track at Hill
Road on the southwest side of Sylacauga, Ala.[3]

On
September 2, 2011, EARY filed a notice of removal to the United States
District Court for the Northern District of Alabama, and subsequently, on
November 15, 2011, it filed a motion to refer that case to the Board.[4]
This matter was referred to the Board by the court on November 17, 2011. Utils.
Bd. of City of Sylacauga v. E. Ala. Ry., No. 1:11-CV-03192 (N.D. Ala.
Nov. 17, 2011).

On
December 16, 2011, EARY filed a petition for declaratory order, asking the
Board to institute a proceeding and find that the proposed condemnation is
federally preempted. On January 19, 2012, the Utilities Board filed its
reply, arguing that the condemnation of an easement for an existing underground
water line and a new underground sewer line is not preempted, and requesting
that the Board take expedited action due to the impending startup of operations
at IKO’s new manufacturing facility in Sylacauga.

By
decision served on January 27, 2012, the Board, through the Acting
Director of the Office of Proceedings, instituted a proceeding to resolve the
controversy at issue and, because the Utilities Board reported that IKO has
requested sewer service by April 1, 2012,[5]
adopted an expedited procedural schedule.[6]EARY submitted its opening statement to
the Board on February 9, 2012, the Utilities Board submitted its reply on
February 13, 2012, and EARY filed its rebuttal statement on
February 21, 2012.[7]

EARY
argues that the Utilities Board’s condemnation action is preempted by
49 U.S.C. § 10501(b) for four reasons. First, EARY contends that certain
broad language in the complaint for condemnation filed in the Probate Court for
Talladega County will give the Utilities Board the right to go across and over (as
well as under) the active railroad operations.[8]
Second, EARY argues that the actual construction of the sewer line will
unreasonably interfere with EARY’s railroad operations.[9]
Third, EARY is concerned that the Utilities Board will construct substandard
pipes under its railroad line.[10]
Last, EARY asserts that, based on the Utilities Board’s past actions, it is reasonable
to expect that the Utilities Board’s actions during construction and
maintenance of the lines will impede railroad operations or safety.[11]

The Utilities
Board counters that the proposed condemnation is not preempted by federal law.
It argues that the “on, across, under and over” language in the complaint for
condemnation is standard terminology, and that the complaint for condemnation
makes clear that the “uses and purposes” for which the easements are to be
condemned are limited to “subterranean water and sewer pipes.”[12]
Further, the Utilities Board argues that the evidence shows that its construction
and operation of the underground water and sewer lines will not unreasonably
interfere with rail operations or pose undue safety risks.

PRELIMINARY MATTERS

On
February 22, 2012, the Utilities Board filed a motion to strike certain
portions of EARY’s rebuttal evidence. The Utilities Board argues that EARY
improperly submitted new evidence, proffered irrelevant and immaterial information,
and asserted the incorrect legal standard applicable to this proceeding. On February 24,
2012, EARY submitted a letter in response and, on February 29, 2012, it
filed a formal reply in opposition to the Utilities Board’s motion to strike.

We
will deny the Utilities Board’s motion to strike. Taking into consideration
the evidence proffered by EARY, we are nevertheless concluding that the
condemnation of the underground pipelines is not preempted by federal law. Moreover,
EARY is entitled to offer arguments regarding the legal standard applicable to
this proceeding. Therefore, the Utilities Board will not be prejudiced by the
admission of the arguments and evidence.

Additionally, in
its reply statement, the Utilities Board argues that we should not give any
weight to EARY’s factual assertions because they are not verified.[13]
EARY responds that its opening statement does not need to be verified because
it was signed by an attorney.[14]
Our rules permit us to rely on pleadings signed by a party’s counsel, and it is
within our discretion to determine how much weight to accord evidence submitted
by parties or their counsel. 49 C.F.R. § 1104.4(a); Norfolk S.
Ry.—Pet. for Exemption—In Baltimore City & Baltimore Cnty., Md.,
AB 290 (Sub-No. 311X), slip op. at 10 (STB served Jan. 27,
2012). Affording equal weight to the pleadings of both parties, we are
concluding, as explained below, that the condemnation of the underground
pipelines is not preempted by federal law.

DISCUSSION AND CONCLUSIONS

Under 5 U.S.C.
§ 554(e) and 49 U.S.C. § 721, we have discretion to issue a
declaratory order to terminate a controversy or to remove uncertainty in a
matter related to our subject matter jurisdiction. As indicated, we instituted
a proceeding in this matter and received evidence and arguments from the
parties.

Generally,
the proponent of an agency order bears the burden of proof. 5 U.S.C.
§ 556(d). EARY argues that, because this proceeding is by court referral,
the Utilities Board should bear the burden of proof on the issue of preemption,
as it was the moving party for the condemnation.[15]
EARY, however, is the proponent of federal preemption as an affirmative
defense to the condemnation action, and so it is EARY that bears the burden in the
court from which this proceeding was referred. SeeFifth Third Bank
v. CSX Corp., 415 F.3d 741, 745 (7th Cir. 2005). It is therefore
unnecessary here to decide whether § 556(d) governs proceedings by court
referral, as EARY bears the burden of proof in this proceeding because it is
the proponent of both the declaratory order and preemption as an affirmative
defense.

The
Interstate Commerce Act, as revised, vests in the Board broad jurisdiction over
“transportation by rail carrier,” 49 U.S.C. § 10501(a)(1), which
extends to property, facilities, instrumentalities, or equipment of any kind
related to that transportation, 49 U.S.C. § 10102(9). The preemption
provision in the Board’s governing statute states that “the remedies provided
under [49 U.S.C. § 10101-11908] with respect to regulation of rail
transportation are exclusive and preempt the remedies provided under Federal or
State law.” 49 U.S.C. § 10501(b).

Under
49 U.S.C. § 10501(b), two broad categories of state regulation are
wholly preempted for rail transportation by rail carriers: (1) permitting or
preclearance requirements that, by their nature, could be used to deny a
railroad the right to conduct rail operations or proceed with activities the
Board has authorized, and (2) attempts to intrude into matters that are
regulated by the Board. Other state actions may be preempted as applied—that
is, only if they would have the effect of unreasonably burdening or interfering
with rail transportation, which involves a fact-specific determination. SeeFranks Inv. Co. v. Union Pac. R.R., 593 F.3d 404, 414 (5th Cir.
2010) (en banc); Borough of Riverdale—Pet. for Declaratory Order,
FD 35299, slip op. at 2 (STB served Aug. 5, 2010).

Condemnation of
railroad property can be a form of regulation by the state and thus could be preempted
under 49 U.S.C. § 10501(b). Dakota, Minn., & E. R.R. v. South
Dakota, 236 F.Supp.2d 989, 1005-08 (D.S.D. 2002), aff’d in part,
vacated in part on other grounds, 362 F.3d 512 (8th Cir. 2004); Wis.
Cent. Ltd. v. City of Marshfield, 160 F. Supp. 2d 1009, 1013
(W.D. Wis. 2000); see alsoNorfolk S. Ry. & Ala. Great S.
R.R.—Pet. for Declaratory Order, FD 35196, slip op. at 3 (STB
served Mar. 1, 2010). This is not to say, however, that all eminent
domain actions against railroad property are impermissible. “Rather, routine,
non-conflicting uses, such as non-exclusive easements for at-grade road crossings,
wire crossings, sewer crossings, etc., are not preempted so long as they would
not impede rail operations or pose undue safety risks.” Maumee & W.
R.R. & RMW Ventures, LLC—Pet. for Declaratory Order, FD 34354,
slip op. at 2 (STB served Mar. 3, 2004).

EARY argues that
the proposed condemnation should be preempted because it will impede rail
operations and pose undue safety risks.[16]
EARY first contends that, because the Utilities Board seeks a right-of-way “on,
across, under and over” EARY’s tracks in the complaint for condemnation, the
Utilities Board will claim that it has the right to go “across and over” the
tracks.[17]
We are not persuaded, however, that the language of the condemnation action
will lead to unreasonable interference with rail operations or pose undue
safety risks. The language in the complaint is limited by the uses and
purposes of the condemnation, which are clearly stated in the complaint as
being for “the construction, operation and maintenance of subterranean
water and sewer pipes, lines[,] facilities and other appliances necessary and
convenient in connection therewith.”[18]
As the Utilities Board points out, the complaint would not give it unlimited or
unfettered access to the EARY right-of-way because such access is not necessary
or appropriate to the operation or maintenance of the underground water and
sewer pipelines.[19]

We are similarly not
persuaded by EARY’s second argument, namely, that the construction of the sewer
line underneath Hill Road would interfere with rail operations or pose undue
safety risks. EARY’s rail operations generally consist of one train, traveling
at 10 miles per hour, leaving Sylacauga at 8:00 p.m. each weeknight and then
returning to its own yard before daylight the following morning, as well as one
round-trip hi-rail vehicle inspection per day.[20]
The Utilities Board states that the sewer line would be constructed using a
tunnel boring method, and that no surface occupancy is anticipated other than
to surface-paint the underground pipes.[21]
A similar method was used in constructing two underground pipelines across
EARY’s right-of-way in June 2010, and the record indicates that this
construction was completed in two days and there was no interference with rail
operations during that time.[22]
Moreover, the Utilities Board asserts that it is willing to cooperate with EARY
in scheduling its construction work.[23]
Specifically, the Utilities Board states:

As
already stated by the Utilities Board, and in a spirit of cooperation and to
ensure safe construction and operation, the Utilities Board will follow
specifications of the American Railway Engineering and Maintenance-of-Way
Association ("AREMA") as a minimum, will follow reasonable safety
precautions of EARY, and will cooperate with EARY to establish a reasonable
timeline for construction. See Reply to Petition at 17.[24]

Nevertheless,
EARY contends that, if the Utilities Board is not required to seek input from
EARY on its construction schedule, EARY will not be able to “plan around the
construction thereby creating the least disruption to its operations.”[25]
As the above representation indicates, however, the Utilities Board has already
agreed to cooperate with EARY to establish a reasonable timeline for
construction. Moreover, our concern here is whether the proposed construction
would unreasonably interfere with EARY’s operations. Based on these facts,
we conclude that the proposed construction will not.

Additionally,
EARY raises concerns about the construction standards that are to be used,
stating that it “expects the Utilities Board to [construct substandard pipes
under the railroad line] since it does not believe it must comply with EARY’s
engineering requirements.”[26]
Again, the Utilities Board has already represented that it will follow
appropriate industry standards, a representation that we will accord due
weight. In addition, while we are not in a position to declare what is or is
not standard with respect to engineering requirements of subterranean pipelines
in this proceeding, based on the record here, we believe state law is adequate
to address any concerns by EARY with respect to the construction standards of
these pipelines.

Lastly, EARY
argues that, because the Utilities Board’s past actions demonstrate a disregard
for railroad operations and safety, it expects the Utilities Board to engage in
self-help when maintaining the lines in the future and to act with a similar
disregard for railroad operations and safety. EARY cites several incidents
between April 2009 and November 2011 as evidencing the Utilities
Board’s propensity to impede rail operations and disregard railroad safety. Although
the parties in their pleadings have engaged in a back-and-forth in terms of how
to properly characterize these events, we need not resolve the factual
controversy surrounding them. The types of sporadic incidents involving
maintenance or construction described in the record do not rise to the level of
unreasonably interfering with rail operations or creating an undue safety risk such
that they would implicate federal preemption.[27]

In sum, we
conclude that, based on the record before us, the Utilities Board’s condemnation
of EARY’s property for two underground pipelines will not unreasonably burden
or interfere with rail operations or pose undue safety risks. Accordingly, the
proposed condemnation is not preempted by federal law.

This action will
not significantly affect either the quality of the human environment or the
conservation of energy resources.

It is ordered:

1. The Utilities Board’s motion to strike is denied.

2. This
request for a declaratory order is granted, but, as discussed above, the
condemnation is not preempted by federal law.

[1] The digest constitutes no part of the decision of
the Board but has been prepared for the convenience of the reader. It may not
be cited to or relied upon as precedent. Policy Statement on Plain Language
Digests in Decisions, EP 696 (STB served Sept. 2, 2010).

[2] EARY Pet. at 17. The Utilities Board seeks to
acquire two pipeline easements, one for a water line and one for a sewer line.
The water line already exists and was included in the condemnation action in
order to formally establish the Utilities Board’s legal right to use the water
line. Utils. Bd. Reply to Pet. at 7. The sewer line is a proposed line that
would require construction. The proposed line would provide sewer service to a
roofing products company called IKO. Util. Bd. Reply to Pet. at 6. Evidently,
IKO will also be a shipper using EARY’s rail service. EARY Appeal at 3.

[6]EARY
subsequently filed an appeal of that decision pursuant to 49 C.F.R.
§ 1011.6(b), arguing that the Board’s setting of an expedited schedule
with no provision for discovery was a clear error of judgment and would create
manifest injustice. The Board denied EARY’s appeal by decision served on
February 22, 2012.

[7] Additionally, Paducah & Louisville Railway, Inc.
(P&L) filed comments on February 15, 2012, the R.J. Corman Railroad
Group (Corman Group) filed comments on February 23, 2012, and the American
Short Line and Regional Railroad Association (ASLRRA) filed comments on February 29,
2012. Both P&L and the Corman Group state that they do not take a position
on the merits or ultimate outcome of this particular case, but indicate that
they have experienced similar disputes with utility companies regarding the
installation of utility crossings. ASLRRA states that it is concerned about
these types of condemnations by utility companies. The Utilities Board
responded to P&L and the Corman Group by letters filed on February 21,
2012, and February 23, 2012, respectively. These comments are not
directly applicable to the specific dispute before us in this case, and, as
such, we will not address them here.

[18] EARY Opening Statement, Ex. F (emphasis added). The
complaint for condemnation also prays that “an order will be made . . .
condemning to the uses and purposes of [the Utilities Board], all the rights,
authority and power sought and described herein . . . .” Id.